The Sherwin-Williams Company
Analysis
Demand never came back, so Sherwin-Williams made itself the growth engine: new stores, reps and accounts are winning gallons in a flat market. The fight now is whether this year's two price increases outrun a raw-material bill that lands hardest in the second half.How much of the stores volume growth comes from new accounts?
- Growth now comes from taking share, not from the market.
Results beat expectations in each of the last four quarters, and Paint Stores volume turned positive after being guided to fall. Management calls the new-account pipeline the strongest ever, so it can grow without the market.Which end markets supplied the biggest new-account wins?
- Price is now chasing cost rather than leading it.
The Middle East conflict reversed the raw-material outlook: prices went up twice this year and the inflation forecast rose with them. The second stores increase was held to September, so it pays back later than the costs it covers.
- The cost of chasing volume shows up in price and margin.
The fastest-growing segments, like commercial and property maintenance, earn similar profit but drag down the price mix it reports. Full-year gross margin is still guided flat, so the increases cover inflation rather than add to profit.What share of sales come from those lower-price-mix segments?
- The price increases land at their normal rate. Higher bills get paid for by customers rather than absorbed, so profit grows with no help from housing.
- New accounts and reps keep converting into gallons. Each win adds paint sold through stores that already exist, so a flat market still produces more profit.
- Data-center and packaging demand keeps running. These are the fastest-growing pieces and they do not need a housing recovery, so they carry the year.
- Raw-material costs overshoot the forecast again. The increases were sized for smaller bills, so the gap gets closed by cutting costs instead of charging more.
- Homeowners keep putting off repainting. Residential repaint is where the most paint is up for grabs, so a frozen market takes the volume target with it.
- Trading price for gallons goes further than planned. More paint goes out at lower average prices, so sales rise while profit does not.
| Politician | Transaction | Amount | Traded | Filed |
|---|---|---|---|---|
Donald Trump Republican · Executive | Purchase | ≥$1K | Aug 24 | Oct 8 |
Donald Trump Republican · Executive | Sale | ≥$1K | Jul 24 | Sep 22 |
Donald Trump Republican · Executive | Sale | ≥$15K | Jul 23 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$15K | Jul 8 | Sep 22 |
Donald Trump Republican · Executive | Purchase | ≥$1K | Jul 8 | Sep 22 |
Congressional trading data provided by QuiverQuant
How The Sherwin-Williams Company turned $23.6B of revenue into $3.8B of operating income.
| Revenue | ||
|---|---|---|
| Paint Stores Group | $13.6B | ▲ 3.17% YoY |
| Consumer Group | $8.6B | ▲ 1.69% YoY |
| Global Finishes Group | $6.8B | ▼ 0.47% YoY |
| Total revenue | $23.6B | |
| Gross profit | $11.5B | 48.8% |
| Operating income | $3.8B | 16.2% |